Chairman's Statement

ON BEHALF OF THE BOARD OF DIRECTORS,
IT IS MY PRIVILEGE TO REPORT THAT KUMPULAN
PERANGSANG SELANGOR BERHAD ("PERANGSANG
SELANGOR") SUCCESSFULLY ENTERED INTO AN
EXCITING ERA OF NEW BEGINNINGS IN 2016.

Fresh from having completed our Corporate Turnaround Plan, we undertook a recalibration of our investment portfolio
and went full-speed ahead to set a new direction for Perangsang Selangor Group ("the Group").

I am pleased that we single-mindedly accomplished our goals: investing into high-growth yet steady-income opportunities
across multiple industries to imbue a greater degree of sustainability in our business model, whilst implementing
continuous operational and cost efficiencies to hone our competitive edge in the respective arenas.

Staying true to our core business as an investment holding company, Perangsang Selangor undertook a number of
investments in the year under review, ensuring that each investment decision satisfi ed our stringent criteria. These
comprise three broad strokes, where the Group would hold majority stake in investee companies that are clearly or
have the potential to be market leaders, operating in large and high-potential growth sectors, and possessing both the
scalability and management prowess to expand in the domestic and global markets.

These investments effectively prepared a formidable launch pad on which Perangsang Selangor would embark on our
next step of "Growing Beyond Borders"; forming the theme of this Annual Report, and underlying the thrust of our
strategic expansion blueprint.

Acquisition of 51.0% stake in Smartpipe Technology Sdn Bhd ("SPT")

On 21 March 2016, we acquired a 51.0% stake in SPT, which had
obtained a license from Dutch fi rm Wavin Overseas BV ("Wavin") to
market, sell and install compact pipe technology pipes and other
products, know-how and technology granted under the licence
agreement primarily for the rehabilitation of water mains, drains
and sewers. Wavin’s cutting-edge technology, already with proven
track record in many parts of the world with numerous successes in
pipe rehabilitation exercises, would enable Perangsang Selangor to
participate in the national non-revenue water reduction programme.

The acquisition of SPT is a strategically opportunistic investment
aimed at positioning Perangsang Selangor favourably to capture the
vast potential in the domestic water sector.

On 23 May 2016, Perangsang Selangor completed the acquisition
of 60.0% interest in Kaiserkorp, the holding company of a whollyowned
U.S. based King Koil Licensing Company Inc, which owns
the King Koil® mattress brand and related intellectual properties
including trademarks and patents. The acquisition marked our
venture into the licensing industry

This is an exciting development for the Group, because it represents
our fi rst foray into the international sphere in line with our objective
of growing beyond borders, backed by lucrative and sustainable
revenue-generating capabilities.

On 30 June 2016, Perangsang Selangor completed acquisition
exercises that effectively increased our existing shareholding to hold
a direct 51.0% stake in Aqua-Flo. Previously, Perangsang Selangor
held an indirect stake of 36.0% equity in Aqua-Flo. Aqua-Flo is
involved in the trading of water treatment chemicals and equipment,
in addition to providing technical services in water, waste and
sewerage treatment industries.

We are pleased that this exercise resulted in the Group possessing
a majority stake in Aqua-Flo, hence enabling us to be in the driver’s
seat in steering the direction of the largest supplier of water
treatment chemicals in Selangor.

Acquisition of Century Bond Bhd ("CBB")

On 8 November 2016, Perangsang Selangor completed the acquisition
of 71.4% of CBB shares, which required us to undertake a mandatory
general offer to acquire the remaining CBB shares. The closing date
of the offer was 28 March 2017 where we held 98.9% stake in CBB.
CBB is the market leader in the manufacturing of cement bags
with a signifi cant market share in Peninsular Malaysia, as well as
presence in Indonesia, Singapore and Thailand.

In addition to being a steady cash-fl ow generator, we strongly believe
that the proven success of this dominant player has the potential to
be replicated in the regional markets in the future, thus promising
enhanced returns ahead.

CAPITAL MANAGEMENT

In line with our growth-centric approach, the Group
invested a total of RM325.0 million during the year for
acquisitions of subsidiaries, which were financed by
proceeds from the Development Agreement between
the Company’s subsidiary Cash Band (M) Berhad and
Setia Eco Templer, a wholly owned subsidiary of SP Setia
Berhad, for a mixed development project comprising
residential and commercial properties in Templer Park
of RM60.0 million and drawdown of new borrowings as
well as internal generated funds of RM265.0 million. These
investments into sustainable and cash-generative assets
are anticipated to gradually enhance the Group’s overall
asset base and subsequent returns to shareholders..

2016 ECONOMIC REVIEW

It must be said at this juncture that the Group’s various
investment decisions were constantly held up in close
scrutiny against a gloomy backdrop of the international
and local economy. Numerous headwinds in 2016 made
for a tumultuous year in the global arena, marked
by tepid growth in advanced economies of the United
States (“U.S.”), Europe and China as they struggled to
fi nd equilibrium to confi dently advance their expansion.
Unsurprisingly, the global demand slowdown constrained
the potential uptrends in prices of crude oil and other
commodities, exacerbated by supply glut worldwide.
These uncertainties cumulatively placed further downward
pressure on global interest rates, and reiterated the case
for accommodative monetary policies.

Malaysia faced its fair share of challenges in the year
under review, as the oil exporting nation grappled
with prospects of lower Government receipts in light
of reduced crude oil prices, and the generally muted
economy adversely impacted the strength of the Ringgit
compared to major international currencies.

The manufacturing sector further noted operational
challenges in the form of higher raw material prices and
labour shortage, particularly the supply of foreign workers.
Nonetheless, domestic exporters took advantage of the
weaker Ringgit, leveraging on enhanced competitiveness
vis-à-vis regional counterparts in targeting overseas
markets. In the public sector, the Government maintained
its public spending on key projects, especially high-impact
infrastructure projects.

Overall, this mixed bag of fates resulted in Malaysia
recording a slower pace of growth, with Gross Domestic
Product ("GDP") expanding 4.2% in 2016, versus the 5.0%
in the previous year.

2017 OUTLOOK

Following the moderated growth pace in 2016, the
International Monetary Fund has projected for global
economy to regain its momentum in 2017, on the back of
encouraging indicators in advanced economies in terms
of reduced inventories and recovering manufacturing
output. The gradual improvements in housing sales
and unemployment rates in the U.S. paint a positive
outlook for the general consumer market, propping up
expectations of accelerated buyer behaviour.

Still, global trade projections stand to be greatly
impacted by ramifi cations of possible policy changes by
the changing U.S. administration, which could potentially
derail global economic recovery.

While these developments are expected to have a negative
spill over effect on the export-focused Southeast Asian
region, developing economies such as Malaysia have
committed to strengthening the resilience of its economy.
Bank Negara Malaysia has imputed anticipated GDP
growth of between 4.3% to 4.8% in 2017, spearheaded
by private domestic consumption and public sector
expenditure for key infrastructure developments, ranging
from transport-related highways and expressways,
to utilities enhancement projects.

This relatively positive outlook undergirds our prospects
for the coming years, and we at Perangsang Selangor
endeavour to capture the tremendous opportunities in the
local manufacturing and infrastructure-related sector, as
well as the international consumer market.

INDUSTRY RECOGNITION AND ACHIEVEMENTS OF 2016

Risk Manager of the Year 2016

Alongside ongoing endeavours to expand the breadth
of our business, we have always upheld the highest
standards and sought to implement best practices of
corporate governance in order to achieve business
sustainability and shareholders' rewards.

We are heartened that our efforts to this end have been
recognised by the industry. Therefore, I am pleased to
announce that Perangsang Selangor clinched the reputable
"Risk Manager of the Year 2016" award bestowed by the
Malaysian Association of Risk and Insurance Management
("MARIM"). The award was presented to Perangsang
Selangor during the MARIM Risk Management Conference
held at Sunway Resort Hotel and Spa, witnessed by more
than 100 delegates representing at least 40 corporate
organisations across Malaysia.

Of the total 10 organisations from various industries
that participated in this year’s competition, only two
companies were shortlisted in the final round. This
accolade demonstrates the industry’s recognition of
our high-impact initiatives, structured Enterprise Risk
Management ("ERM") framework, tremendous efforts in
promoting good risk management practices as well active
involvement across levels from the Board of Directors
and senior management to all employees.

For the record, this is the third consecutive award received
by Perangsang Selangor under the same category within
a span of four years, after being amongst the Top 5
fi nalists in 2013 and winning the second runner-up in
2015. Kudos to the team!

Invitation and appointment to MARIM Executive Committee
for the 2017-2018 Term

Further to the commendations for our Risk Management
practices, I am pleased to announce that Perangsang
Selangor has been elected by the members of MARIM
to the MARIM Executive Committee for a 2-year term
from 2017 to 2018, during the recent MARIM Annual
General Meeting. This appointment to the national Risk
and Insurance Management Association is certainly an
honour for the Group, which would allow us to be part
of the leading role in promoting, encouraging and sharing
of best practices via establishments of various initiatives;
which would further enhance the Risk and Insurance
Management practices amongst the risk practitioners.

Top 22 in achieving high Return on Equity ("ROE") among
Top Government-Linked Companies ("GLCs")

In a study undertaken by business weekly Focus Malaysia,
Perangsang Selangor garnered acclaim for achieving the
22nd highest ROE amongst the top 45 GLCs in 2016.

Achieving strong ROE is one of the key indicators favoured
by investors as a measure of the Group’s profi t-generating
capabilities on shareholders' investments. This notable
mention endorses the competence of the Board and
Management of Perangsang Selangor in efficiently
maximising the capital entrusted by investors, and certainly
spurs us to attain even higher returns going forward.

I am further delighted to report that Perangsang
Selangor earned top 26 among 280 selected PLCs in
Bursa Securities in the Analysis of Corporate Governance
Disclosures in Annual Report 2015-2016.

Across the six Principles of Malaysian Code on Corporate
Governance 2012, Perangsang Selangor scored an average
of 81.2% in 2015, exceeding the average industry score of
68.7% in 2015, and outpacing our average score of 71.1%
in 2014. While pleased with our positive progress, the
Board and Management have taken note of the various
areas of improvement, and will continue its efforts in
evaluating its governance disclosures in response to the
evolving best practices and the changing requirements.

CORPORATE SOCIAL RESPONSIBILITY ("CSR")

Through its far-reaching CSR programmes over the
years, Perangsang Selangor has maintained its unceasing
and steadfast commitment to continuously develop and
elevate the wellbeing of the community in Selangor across
key socio-economic aspects, including entrepreneurship
development, education, sports and health development,
religious programmes and community enhancements.

As disclosed in the CSR Statement in this Annual Report,
I am heartened that these initiatives have achieved the
desired impact to our target communities, and we strive to
gather more momentum in this respect going forward.

APPRECIATION

While 2016 was undoubtedly a challenging year,
I am heartened by the formidable commitment and
collaboration of my fellow Directors and key management
in charting the course for Perangsang Selangor towards
long-term growth.

I would also like to record my appreciation to our
trusted employees, partners, business associates
and shareholders for their continued support for our
endeavours. We hope to count on your continued loyalty
going forward.